IMF Downgrades Outlook For U.S. Economy, Urges Fed To Delay Rate Hike
Source: Associated Press
The Associated Press
Published Thursday, June 4, 2015 11:45AM EDT
WASHINGTON -- The International Monetary Fund urged the Federal Reserve to wait until the first half of 2016 to start raising short-term interest rates because the U.S. economy remains subpar.
In its annual checkup of the U.S. economy released Thursday, the IMF said "the underpinnings for continued growth and job creation remain in place." But America's "momentum was sapped in recent months by a series of negative shocks," including a harsh winter and a strong dollar that hurts U.S. exports.
The IMF predicted the U.S. economy will grow 2.5 per cent this year, down from its April forecast of 3.1 per cent.
The agency said the Fed should wait for more signs of improvement -- specifically "greater signs of wage or price inflation." The central bank has kept its key benchmark rate at a record low near zero since December 2008.
Read more: http://www.ctvnews.ca/business/imf-downgrades-outlook-for-u-s-economy-urges-fed-to-delay-rate-hike-1.2406394
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CountAllVotes
(20,878 posts)Too damn busy catering to the .... 1%! 
On the Road
(20,783 posts)the article would be saying exactly the same thing if the Fed had actually raised rates. Keeping rates low is usually depicted as being progressive, and for good reason.
Any move to improve the economy can be positioned as helping the 1%.
JDPriestly
(57,936 posts)portion of the earnings are going to the top 1%, we get a bloated stock market, weak interest rates and a very sick economy.l
The problem with the high stock market prices is that the money invested in the stock market is in publicly traded companies, many of them multinationals. That money does not get reinvested in Main Street American JOBS or at least too little of it does.
That money gets invested in schemes to save money on labor costs -- like Disney's hiring H1-Bs to replace computer geeks at Disneyland.
The people who own sizable investments in companies like Disney could care less about the living standards of Americans. They just want more, more, more short-term profits for themselves.
Keeping rates low is thought to be progressive, but at the moment, the only progressive thing is to get some money invested in Main Street jobs by raising the taxes on the top 1% or so of incomes and raising wages gradually. The cap on payment of Social Security taxes also needs to be raised, and Social Security benefits need to go up to catch up with the wages that should be raised.
Romeo.lima333
(1,127 posts)i wonder if this is engineered
Spitfire of ATJ
(32,723 posts)There you have it.
The agenda laid bare.
They define a good economy as one with a weak dollar. One where you pay more to get less. This transfers wealth upwards faster than anything else.
melm00se
(4,994 posts)improves the domestic manufacturing sector, especially one that exports.
Weak(er) currency = cheaper exports, more expensive imports
Strong(er) currency = more expensive exports, cheaper imports
Simple economics.
Spitfire of ATJ
(32,723 posts)Our GOAL shouldn't be to provide cheap exports.
melm00se
(4,994 posts)2 equal quality products that have the same cost in local currency with the only difference is the relative strength of the currencies means that the product made in the country with the weaker currency is a better deal in the country with the stronger currency. the reverse is true: exports from the country with the stronger currency is less of a deal in the country with the weaker currency.
This is why exports and imports rise and fall in direct correlation to the strengthening and weakening of the currencies,
don't believe me?
read here and here,
melm00se
(4,994 posts)You own a factory in the United States of You. I own a factory of the Republic of Me.
Your currency is the YC, my currency is the MC.
We both make the same widget.
You make the uWidget and I make the mWidget.
The uWidget sells for 1YC and the mWidget sells for 1MC.
If 1YC = 1MC, then there is no advantage for me to buy the uWidget from you or for you to by the mWidget from me as they cost the same.
If, however, 1YC = 2MC (making your currency “stronger” than mine), then you convert your 10 YCs into 20 MCs (because I can’t use YC’s in the Republic of Me). This allows you to buy 20 mWidgets, take them back to the United States of You and sell them for 1MC each. 20 mWidgets x 1MC = 20 MCs, netting you a profit of a 100% profit per unit because you bought each mWidget for the equivalent of 0.5 MCs per unit.
For me, on the other hand, to buy a uWidget , it would cost be 2 MCs (2 MCs = 1 YC) which I can only sell for 1 MC.
This is how and why currency strength directly influences imports and exports.
Spitfire of ATJ
(32,723 posts)I'm saying the rich are driving down the value of the dollar so they can make more of them and thus make a killing after they rebound.
It's a long term strategery.
melm00se
(4,994 posts)net rise in the dollars value over the last six months?
Spitfire of ATJ
(32,723 posts)
brentspeak
(18,290 posts)to make a weak dollar artificially "strong".
melm00se
(4,994 posts)as the Yuan is not allowed to float freely (which also makes valuing the Chinese economy a challenge). Fortunately, the yuan isn't the only currency that counts which is why how the USD compared to the Euro, GBP and Yen is a better match.
Recursion
(56,582 posts)Weak dollar is good for workers. Strong dollar is good for investors.
Spitfire of ATJ
(32,723 posts)America's labor has been on a fixed income for decades.
The top claims they're broke to the workers and rich to the investors.
Recursion
(56,582 posts)By selling dollar-denominated bonds overseas. This is one effect of that.
Spitfire of ATJ
(32,723 posts)That's why people selling stock are always talking about the collapse of the dollar.
Back during WWII it was patriotic to buy bonds. Republicans call those bonds "IOUs". Greenspan lowered the interest on those bonds to nil to get the investor class to buy stocks. We could use that money for infrastructure spending instead of what's become casino gambling.
